Would the ECB bail out an Irish Bank?

[mairteenpak]

There is something of the order of 300 billion lend against property related "investment" in Ireland. given the phenomenal appreciation of property in Ireland over the last ten years, and the adverse economic climate we are facing what is to stop property falling in value by 60% or 70%?

Bearing in mind that a lot of money has been lend against land whose value might evaporate entirely as interest is rolling on a lot of loans.

If one institution were to see the value of the security for the lending fall by say 40 billion, and was in a situation where in it had a lot of non performing loans, and the bank experienced a run on its funds, would the ECB lend the funds to keep the bank in business?

The Government could hardly afford to come up with 40 billion

[Rathmines_Corkonian]

I would say that Irish banks are too small in the Grand scheme of things. The open window of the ECB is being curtailed, so I would presume not. We should in the next year, see banks go to the wall in Spain. This will give some indication.

[mairteenpak]

Could the State face a claim for negligence if a bank failed and the ECB said no bailout?

[Rathmines_Corkonian]

I wouldn't be certain but I doubt it. The current support from the ECB, is out of their desire to ensure that liquidity gets back into the market. They are under no obligation. It will probable mean the end on Irish owned banking.

[Anorakphobia]

I would say the chances pre Lisbon were small, post Lisbon zilch.
They would dance on our graves.

[mairteenpak]

It would set a precedent for a bailout of a bigger bank in a bigger country. It would be likely to have effects on exchange rates and interest rates.

[constitutionus]

ironically considering whats happening in america i can see them calling market forces and letting em fold.

were just not that important or that big.

WHO would take over would be the fun stuff. would deutche bank step in to take over the mortgages ala what happened with bear sterns in the states? or a france based institution buy out the infrastructure on the cheap?

maybe even outside the EU entirely considering NIB is owned by an australian crowd

it'd be new territory for us as the gov would definetly say "nowt to do with us " and the good and the great in the banking sector will be held accountable for the FIRST time in their lives.

the idea probably scares the ************************e out of em :mrgreen:

[mairteenpak]

In such an event could Joe Bloggs sue the Central Bank for negligence in regulating the Failed Bank?

[droghedasouth]

NIB is now owned by a Danish bank if my memory is correct.

The Central Bank of Ireland is responsible for the supervision of banks based in Ireland, not the ECB, so your question is based on a false premise.

ECB is providing more than 2 billion euro in funding to EBS at the moment which is their job.

[mairteenpak]

NIB is now owned by a Danish bank if my memory is correct.

The Central Bank of Ireland is responsible for the supervision of banks based in Ireland, not the ECB, so your question is based on a false premise.

ECB is providing more than 2 billion euro in funding to EBS at the moment which is their job.

Of course the Central Bank does the regulating in Ireland. If they did an effective job then no bank would face a crisis. If they do not do an effective job of regulation and a bank goes, then why could they and the State not be sued for negligence?